Setting Up a Solar Farm: Costs, Funding and How To Run It Effectively

solar farm cost and running a Solar Farm
Once you’ve got your solar farm set up and running you’ll need to think about the potential risks and the essential insurance cover needed.

Setting up a solar farm can be financially (and environmentally) rewarding, but no-one would say it was easy. We’ve put together this super-guide to cover everything you need to know to make your solar farm a success, including solar farm cost implications, how to find funding, running a solar farm for the best ROI and protecting your investment.

Setting up basics

Solar power facts:

  • Solar power is popular with the public – more than 80% of the British public support solar power, making it the most popular source of power
  • Solar farms could provide a return of around 6% a year and offer a clean, renewable source of energy that may be the solution to future energy shortages.
  • According to the government in December 2015, there were 426 solar farms in the UK with a further 70 being built and 123 proposed
  • The UK is required to meet an EU renewable energy target of sourcing 15% of its energy from renewables by 2020

What is a solar farm?

Put simply, a solar farm is where solar panels are used to ‘harvest’ energy from the sun in larger numbers than simply a few roof panels on a private house. The size of a site might range from one acre to 100 acres. The panels can be set on the ground in a field or on the roof of a commercial building; anywhere where the sun’s rays can be captured. The energy that is made can then be used to cover your own energy needs with any surplus being fed into the national grid, generating revenue.

If you own a commercial building such as an office or factory and have space for solar panels you can not only reduce your energy bills and potentially generate a new source of income by installing solar panels, but you could also improve your business’s green credentials in the eyes of your customers.

How much energy will it generate?

Approximately 25 acres of land is required for every 5 megawatts (MW) of installation. Based on the average annual energy consumption of a household, for every 5MW installed, a solar farm will power approximately 1,500 homes for a year.

Solar farm cost: financing your farm

Whilst you’ll see a return on your investment in terms of energy bills being cut and a new source of income from the extra energy generated, set-up costs for a solar farm can be substantial. You could either fund the installation of panels yourself, get backing from your bank or create a cooperative group made up of members of the community. With a community co-operative, local people are invited to purchase a share, which is used to cover the costs of setting up and running the solar farm. Each member of the group then gets to take advantage of the energy being produced and share any profits. Westmill Solar on the Oxfordshire/Wiltshire border was the first community-owned solar farm in the UK and has over 1600 members.

Planning guidance

The installation of solar panels on non-domestic buildings and land may be considered ‘permitted development’ with no need to apply to the local planning authority for planning permission. However, like any development, solar farms can affect the surrounding area and there are limits to ‘permitted development’, so it is best to get in touch with your local planning authority. If you’re planning a farm in the countryside, you should also get in touch with Natural England to go through what steps you might need to take to safeguard the environment. Doing this at the outset can help the process to run more smoothly, and avoid costly delays.

Technical considerations during planning stage:

  • Solar resource – how much energy can you expect to generate?
  • Topography – the shaping of the land to be used and surrounding land
  • Proximity to existing grid infrastructure – is it easy to get the energy you generate to the national grid?

environmental impact solar panelsEnvironmental considerations during planning stage:

  • Soils and soil structure – how will it be affected?
  • Wildlife habitats and designated sites – are you planning to build on a naturally important site?
  • Effects on specific, protected wildlife species – is the site home to any protected wildlife species, such as great crested newts?
  • Potential damage to designated landscapes – what impact is building the site likely to have?
  • Effects on the character of the landscape – how will the farm affect the surrounding area?
  • Damage to geological and archaeological features
  • Implications of water run-off – will the site cause flooding?

Compared to wind farms, solar farms have less visual impact and create and no noise issues. Ensuring good screening to lower visual impact further and working with the local community to either create a community co-operative or agree how to minimise any disturbance can both help reduce potential objections to any plans.

Feed in Tariffs

The Feed-in Tariffs (FITs) scheme is a government scheme designed to help increase the uptake of a range of small-scale renewable and low-carbon electricity generation technologies. For solar energy, you will be eligible for the FITs scheme if you have a total installed capacity of 5MW or less. The amount of money you receive for any surplus energy varies and is currently under government discussion, so check out the Energy Saving Trust for the latest details.

Is starting a solar farm profitable?

Maximise your return on investment by considering the following 4 essential factors:

1. Positioning your solar panels

To maximise the amount of energy you can generate your solar farm needs to be positioned in full sun for as long as possible throughout the year. That means facing south-west – although solar panels will still generate power whatever direction they are pointing.

To make the most of the sunshine consider installing motors that allow panels to track the movement of the sun through the sky. Or you could increase output by installing a Fresnel lens or mirror that will concentrate the sun’s rays onto the panel. You should also take care to ensure there are no trees or bushes that have grown and are now creating shade on your panels.

solar panel cleaning2. Plan for cleanliness

Solar panels make energy from sunlight – and the more sunlight that gets to them, the more they will produce. If they are covered with dirt or leaves, less of the sun’s rays can reach the panel, so less can be transformed into electricity. It makes sense therefore that keeping them clean can also help them to work at their maximum capacity.

Google did some research into the benefits of cleaning their solar panels at their office in California and found that clean panels increased output by 36%. Depending on the size of your solar farm, this could be a big job, and one you’ll need to call in the professionals for help with, but it will make a big difference.

3. Know how long your solar panels will last

Solar panels are durable and designed to withstand being out in all weather for a long time. Generally speaking, a solar panel will last around 30-40 years, with many offering warranties covering up to 20 years. But you can expect panels to lose efficiency over time, with a drop of around 0.5% in efficiency every year. The inverters, which transform the energy produced into the AC power that can be used, generally have a shorter lifespan that is typically around 15 years.

Keeping your inverter up to date and working efficiently will help you to make the most of your solar panels.

4. Understand (and check) your output

Regularly check your energy output on either your inverter or monitoring system. If you notice a substantial drop in energy production you can quickly identify the reason and get your panels working at maximum efficiency again.

Support from the Solar Trade Association

The Solar Trade Association is a not-for-profit organisation that offers resources and guidance on everything to do with solar energy. Their members follow the 10 Commitments best practice guidance to ensure the quality of solar farms in the UK, which include:

  • Agreeing to focus on non-agricultural land or land which is of lower agricultural quality
  • Being sensitive to nationally and locally protected landscapes and nature conservation areas, and we welcome opportunities to enhance the ecological value of the land
  • Minimising visual impact where possible and maintain appropriate screening throughout the lifetime of the project managed through a Land Management and/or Ecology plan
  • Engaging with the community in advance of submitting a planning application, including seeking the support of the local community and listening to their views and suggestions
  • Encouraging land diversification by proposing continued agricultural use or incorporating biodiversity measures within our projects
  • Buying and employing locally as much as possible
  • Acting considerately during construction, and demonstrate ‘solar stewardship’ of the land for the lifetime of the project
  • Offering investment opportunities to communities in their local solar farms where there is local appetite and where it is commercially viable
  • A commitment to using the solar farm as an educational opportunity, where appropriate
  • At the end of the project, returning the land to its former use

solar fam cost calculatorCover your solar investment

Once you’ve got your solar farm set up and running you’ll need to think about the potential risks and the essential insurance cover needed to protect your business financially. Your solar farm could make up a substantial part of your income, if not all of it, so make sure that it’s covered by the right level of insurance should anything go wrong.

Key insurance areas to consider include:

Machinery breakdown – electrical and/or mechanical breakdown of any machinery or other equipment could result in costly repairs or even require replacement of the solar panels

Business interruption – cover your solar farm for periods of operational downtime as a result of an insured peril such as fire or storm damage, machinery breakdown, and equipment failure. We can also cover lost revenue associated with the failure or physical damage to non-owned property such as a utilities substation.

Property damage – extra ‘all risks’ cover to protect from any loss arising out of fire, hail or storm damage, which is normally excluded from standard policies.

Contract works – protection against any loss arising from property damage caused during construction of the project. Also protects the value of labour and materials of the work in progress in the event that it is damaged by theft, vandalism, fire, storm, etc. Cover starts while solar panels are in transit to the job site and ends once the job is completed or the owner accepts the work

Computer – cover for specialist computer equipment, including laptops and portable media used off site. Reinstatement of Data cover should also be considered to protect from any loss of valuable data not easily replaceable

Employers’ liability – provides cover against risk of accident from usual workplace risks such as working at height and manual handling

Public liability – provides cover for any damage caused to third party property during installation of the panels. Essential for all businesses engaged in construction and installation of solar panels and solar farms

Directors and officers cover – a very useful cover for this sector due to the use of new and emerging technologies, processes and equipment. Helps protect company directors and officers if accused of any ‘wrongful acts’

You might only need a few of these insurance options or you might need them all. Whatever your requirements, at Park Insurance we are specialists in getting our customers the best possible deals on their insurance and bring down your overall solar farms costs. With over 20 years of experience and of building great relationships across many industries, our professional team has the expertise and knowledge you need to get tailor-made cover for your solar enterprise at the right price.

If you’d like to find out more or get a quote on your insurance, please get in touch today.